Saturday, August 25, 2007

The headline used by the mass media, burdened with an insatiable need to oversimplify everything they touch:

New-home sales rise 2.8% to 870,000 pace in July

Reason number 2 you should ignore the headline - An easy compare.

The report stated that by region, sales rose 22.4% in the West to 213,000, rose 0.6% in the South to 492,000, fell 24.3% in the Northeast to 53,000, and fell 0.9% in the Midwest to 112,000. The entire increase, therefore, came from the Western region.

If you look deeper into the data you will find that the June 2007 number for the West was 174,000 home sold on a seasonably adjusted annual rate. This was an extremely weak month and was down from 209,000 and 203,000 in May and June 2007, respectively.

So basically, the entire rise in sales was due to this weak compare since every other region was flat or fell.